Saturday, June 25, 2011

Greek Crisis -- My View

*Greece Crisis Stabilized?
Ongoing debates were held to help Greece find a resolution to save Greece from debt troubles and potential default. Greece was downgraded recently by Standard & Poor’s rating agency to CCC (a drop of three credit rating grades below "junk status") meaning Greek debt is “extremely speculative" and the outlook for Greek debt is “negative.”. There is a significantly higher likelihood of one or more defaults in regards to Greece said the ratings agency after the downgrade.

Credit-default swaps on Greece, Ireland and Portugal surged to records on concern European governments’ struggles to resolve the deficit crisis will threaten their ability to pay their debts causing the Euro to surge lower after S&P Downgrade.

The problems with Greece debt has caused a massive amount of ongoing debate and the plot has stayed thick. There were protest in Athens over the governments handling of the debt crisis and economic woes such as unemployment. In Athens, angry Greeks gathered while officials met and the Greeks made sure they were heard.

Banks in the UK and the US have decided to reduce their risk to Greece and there is no appetite in the capital markets to extend finance to Greece. If Greece eventually defaults in the coming years the government could no longer borrow and would have to cut spending rather violently. The Greek lending system would completely implode.

Although Greece is a very small portion of the Eurozone it has created a very large and complicated mess. The only thing Greece can do is restructure it's debt but the ECB and EU have been against it because it would hurt their banks. It’s also very difficult to restructure debt owned to outside governments as those governments would have to take a large losses on their accounts which would cause political uproar from Eurozone members.

Temporary bailouts have been the short-term solution to the problem but there has not been a final solution to the entire debt mess other than kick the can down the road.

Why won't EU let Greece default?
They are afraid of a domino effect. It may actually be better for Greece in the long run to default. If Greece defaults it could cause investment fear that the EU isn't stable and there could be a domino effect (panic & contagion) from other hurting economies such as Spain, Italy, Portugal, and Ireland that would be a worse alternative than bailing out Greece.

The current package of includes spending cuts, tax hikes and privatizations that has become very unpopular throughout Greece.

Sunday, June 19, 2011

Ichimoku Kinko Hyo + Bollinger Bands Weekly Cap Day Charts

The Ichimoku Kinko Hyo is an indicator used for trading financial instruments that uses an on-chart visualization for chartist to graphically show where support and resistance are in the form of Ichimoku Clouds. Ichimoku is not limited by clouds and has several other indicator lines on the chart that also provide graphical signals to technical traders called the Tenkan, Kijun, Senkou, and Chikou lines.

The general theory of the indicator is that if the price goes above the clouds a bullish signal is produced while below the clouds a bearish signal is produced.
The clouds also turn color that correspond to the trend but sometimes they are not inline with when the price crosses. A strong trend will have both a cross and change of cloud color to match the trend direction.

The clouds can also be used with other indicators to confirm trends. A cloud break does not guarantee the trend has change and is mearly a signal that the trend may have changed. It takes a diligent eye and skill with using the indicator to properly use it's powers.

Also put another way: a break below a cloud means the cloud can be a resistance and a break above it the cloud can be a support. Again this takes a diligent eye to properly use these technical analysis techniques and combine them with other theories of techncial trading. Most often knowledge, skill, and experience are the key factors to properly use.

The Tenkan and Kijun lines work similar to short term (Tenkan) and long term (Kijun) moving averages and some people even call them moving averages.

The meaning of the name of the indicator can be translated into "What a man in the mountain sees" and "one glance equilibrium chart" .

Crude Oil Daily Charts (2):

Gold Daily Charts (2):

Silver Daily Charts (2):

DAX30 (Germany) Daily Charts (2):

(DJI)Dow Jones Industrial Daily Charts (2):

Nikei (Japan) Daily Charts (2):

EUR/USD Daily Charts (2):

USD/JPY Daily Charts (2):

USD/CAD Daily Charts (2):

AUD/USD Daily Charts (2):

NZD/USD Daily Charts (2):

USD/CHF Daily Charts (2):

AUD/CHF Daily Charts (2):

GBP/JPY Daily Charts (2):

USD/MXN (Mexico) Daily Charts (2):

USD/ZAR (South Africa) Daily Charts (2):

US Lumber Daily Charts (2):

10yr Note (price only) Daily Chart (2):

Thursday, June 16, 2011

Market Notes Week Of June 13th-17th

**Greece Debt Crisis persist with prior downgrades earlier this week from Standard's & Poor's rating agency which downgraded Greece 8 notches below junk status. The rating Company said the nation is "increasingly likely to restructure it's debt." A restructuring would likely, "result in one or more defaults under our criteria," "Risk for the implementation of Greece's EU/IMF borrowing program are rising, given Greece's increased financing needs and ongoing internal political disagreements surrounding the policy conditions required by Greece's partners." The rating company held it's recovery rating at 4, indicating it estimates bond holders would recover only 30% to 50% of their investment.

**France's top 3 banks were also put on review by Moody's for possible downgrades for their exposure to Greece. The Greece situation seems to be an ongoing theme with the Eurozone and members in disagreement of how the handle the situation properly.

**China continued to be worried about inflation but CPI came in at 5.5% vs the 6.0% that was expected by the market. Despite some signs of slowdown China stayed hawkish about inflation and raised the bank reserve requirement by 50 basis points. This may have had some effect on crude oil's recent fallout.

**US stocks closed higher on Thursday's US session despite major questions in the economy which were overshadowed by the Greek turmoil. US stocks have been on a steady decline since May 1st of this year and this week was by no means an exception overall.

**The Euro continued to be in correction mode to the downside and has not rebounded significantly from it's recent steep fall because of the Greek factor of the equation. Despite a few upside rallies in lower time-frames it has been on the weak side.

**Crude oil continued to be afraid to dare go back over $100 USD a barrel with too many questions about the global economy at large and enough supply seems to saturate the markets with the weaker global conditions but hasn't seemed to help the consumer.

**India raises rates by 25 basis points, more hikes likely. The rate rises from India combined with other countries in hawkish mode likely is putting downside pressure on crude.

**Despite the weaker economy Gold refused to trade much lower and is near record highs despite Crude Oil's recent downtrend / unpopularity. This could be the safe-haven effect at work with the very weak USD policy and despite the fact that QE2 has ended there is however too many unanswered questions as to a "certified recovery" for there to be any real strength tap on wood.

**All eyes will continue to be on the Eurozone as to how to handle the Greece situation and which method will jointly be agreed upon.

Crude Oil Daily Bollinger Bands Chart:

Crude Oil Daily Moving Averages Chart:

Dow Jones Industrial Daily Bollinger Bands Chart:

Dow Jones Industrial Moving Averages Chart:

DAX Daily Bollinger Bands Chart:

DAX Oil Daily Moving Averages Chart:

EUR-USD Daily Bollinger Bands Chart:

EUR-USD Daily Moving Averages Chart:

Gold Daily Bollinger Bands Chart:

Gold Daily Moving Averages Chart:

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Monday, June 13, 2011

Is Chinese economy a rosy picture?

Not according to Nouriel Roubini who has recently been making waves about the possible meltdown (hard landing) in China.

“There are already elements of fragility,” he said. “Everybody’s kicking the can down the road of too much public and private debt. The can is becoming heavier and heavier, and bigger on debt, and all these problems may come to a head by 2013 at the latest.” -Professor Roubini

Roubini points to U.S. unemployment, prolong high oil and food prices, rising interest rates in Asia, and the effect of Japan's trade disruptions from the Earthquake as major catalyst to the global economic woes that are likely to continue according to the New York University professor.

"China is now relying increasingly not just on net exports but on fixed investment" which has climbed to about 50 per cent of GDP, he said. "Down the line, you are going to have two problems: A massive non-performing loan problem in the banking system and a massive amount of overcapacity is going to lead to a hard landing."

Stocks worldwide have also lost more than $3.3 trillion since the beginning of May and this comes at a time of elevated commodity prices. Oil currently near $100 and gold is above 1500.00 (although both have been retreating). Food related commodities (Wheat, Corn, Sugar, Soybeans, ect.) all at very elevated levels. Good if your in that business but not good for a large civilization. Most corporations have been effected (some severely and even fatally) by the economic slowdown and high oil prices.

Jim Rogers however has always been high on China and says that the US may face fresh recession in 2011-12 worse than before. economictimes

"While Fed's Bernanke believes the second half of the year will be better for the US economy, you've got others like economist Robert Shiller saying the US is on the brink of a possible double-dip recession. Which side would you agree with?

Rogers: Bernanke has never been right. He's been in Washington for 7-8 years. Please go back and do a study of his record. You will see that the man has never ever been right. Don't pay any attention to Bernanke.

The economy is slowing down. We're going to have another recession in the US in late 2011 or 2012 or 2013 and it's going to be worse than the last time around, because America has shot all of its bullets, printing money and spending money we don't have. Be very careful."

Dow Jones Industrial Weekly Bollinger Bands:

Dow Jones Industrial Weekly Fibo Moving Averages:

Dow Jones Industrial Weekly (Special Chart) Click to zoom:

Rogers Position & Opinion:
**Gold & Silver - Not interested because it's at or near all-time highs but if it comes down he will buy more.
**Sugar - Optimistic for the next 3-4yrs (holding sugar) because of it's use as fuel and people are more prosperous in China and will buy more sugar than ever before.
**Currencies - He is Long but didn't give specifics. He seems to be pretty much anti-US dollar though.
**Commodities - He says he is Long on commodities but didn't give specifics.
**Emerging Market Stocks - He is Short.
**Technology Stocks - He is Short.
**US Bonds - He is Short.
**Short a large bank in the US - didn't specify which bank.
**Rogers is in the camp that the world is running out of Crude Oil. He believes that although OPEC cheats constantly against each other that they have very little power compared to what they used to have.
**Rogers says the US will start printing money again but after the 2012 election and they may call it something other than QE. So according to him QE3 is not out of the question it will just have another title and method but will be necessary do to economic woes.

---my opinion--- Economic stimulus is necessary to support the stock market at current levels unless better economic news comes out in the form of earnings, jobs numbers, or some other major factor that verifies the economy is recovering. This is my guess and I do not profess to know the future. I am a chartist first and news events are secondary or rather verify my technical analysis.

Sugar Day Chart:

Crude Oil Day Chart: